“Risks are part and parcel of every business”
After graduating from Harvard Business School, when Shripati Acharya joined Boston Consulting Group in India, he started to look at business with an analytical eye. During the course of his career Acharya started building effective teams in companies such as Cisco and Snapfish. His stint in both the US and India helped him understand and address the market from a global and as well domestic perspective. “I felt a burning desire to nurture the entrepreneurial ecosystem in India, which is essential for a country’s economy to thrive. So I decided to mentor and support startups,” he asserts. In an exclusive interaction, the Co-Founder and Managing Partner at Angel Prime tells Sohini Bagchi of CXOtoday that newer technologies and concepts have made the venture capitalist (VC) space an exciting as well as a challenging one and that huge potential for budding entrepreneurs to grow provided they get the right guidance and financial backing. Excerpts.
How do you identify technology startups with potential at a time when everyone is getting on to the tech startup space and majority failing to make a mark?
Investing in the right business is indeed a challenging task but what we look for is that the entrepreneur has the potential to make it big. He can have big ideas but that’s not the parameter. Rather he should have the strength, passion and commitment to take it forward, question himself and is always learning and adapting. Now it all sounds cliché as most investors would look for these abilities in entrepreneurs when funding. The difference here is what technology or services he is providing and the market potential for the offerings. For example, technologies built around social, mobile, cloud and big data or analytics currently has potential and can work, provided the concept is innovative. We also look for niche players, say someone who comes up with a unique product for the healthcare industry that can drive mobility or a niche e-commerce player that have customized its offerings for the domestic market. We identify companies that have a strong domestic focus but also have the potential to expand globally. Even after all the evaluation, there had been instances when the going was not good. But we should also understand risks are part and parcel of every business.
How much do you influence the startup companies or do you also give the promoters a free hand in running the firm?
It works out both ways. However, what we see is young, budding entrepreneurs look for mentorship, because they are mostly not aware of every aspect of a business. Of course the startup while striking the partnership would know that have to surrender some managerial control to a VC firm till the time they are competent. However, in most cases they look for support and mentorship. The relationship is much beyond just funding the company and getting a share of profit. Both the parties are involved in the business such that they are willing to share the profit and loss as well as acquire knowledge base and clientele, thereby adding more value to their business.
Many a times promoters know an idea will fail, yet they get invest into the business and run at a loss. What precautions VCs take in order to avoid such a scenario?
in recent times, the VC space has become a lot more risk averse. Many of them have failed to generate the innovation with regard to the changes in the current business landscape. At the same time, they tend to focus on the short term returns. The current economy is responsible for this to an extent, but there is a need to relook at the existing model, identifying market potentials and fund companies that emerge as real diffentiators. In case of a failure, there is a need for evaluation and a change in the business model. The challenge lies in identifying and mentoring highly motivated entrepreneurs with the ability to innovate and exploit new opportunities and create significant value for investors.
What lessons can CIOs learn from VCs in their professional domain?
The venture capitalists business is all about taking risks. They have to adapt to changing ideas, identify niche and specific resources and ultimately translate their vision into business value. The same holds true in the world of CIOs, who are also undergoing drastic changes, owing to the changes in the business landscape. This has prompted CIOs to bring about major transformational initiatives for their companies. However, any transformation or new software implementations not only involve risks, but also involves a lot of testing and effective execution. A project fails when it lacks the execution. The other lesson is that it is sensible to work with several high-risk smaller projects as against focusing all the effort and risk into one single venture. At the same time, CIOs just like venture capitalists should work in coordination with other stakeholders to implement the vision behind transformational efforts effectively.
Being in a high pressure job that involves both research and speculations, how do find time to relax?
I enjoy trekking and hiking and there was a time when I frequently explored interesting destinations in Europe and America, and not to forget the snow clad Himalayas. Currently such trips are not very regular, but I ensure I live a healthy eating and living, alongside yoga and meditation.
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